Psychologist fears $350,000 bill over trust's shortfall

Oct 11 2012

Karl Egner would like to retire one day without the B.C. government making him pay $350,000 for the privilege.

The 62-year-old psychologist has been providing services to adults with developmental disabilities for 25 years.

He set up Kardel Consulting Services when people began moving from institutions in the late 1980s, and today the company operates group homes, day programs and home shares on Vancouver Island.

Now, the province says that Kardel and more than 200 other community service agencies are each responsible for a share of a deficit amassed by the non-profit trust that administers employee benefits.

The deficit in the agencies' pool topped $17 million last year.

"If I were to wind my business down," Egner said, "I would be deemed to owe $350,000."

Egner and other agencies deny they are responsible for the debt.

They say the province should pick up the tab, because it forced them to join the Healthcare Benefit Trust in the late 1990s as part of a negotiated labour deal.

The agencies also say the trust caused the deficit by setting its rates too low to cover rising long-term disability claims. They say the B.C. government benefited from those low rates, because it pays the agencies' bills.

But the government and the trust say the agencies signed contracts and knew they would be on the hook for any deficit.

As a result, agencies that leave the trust are hit with exit levies to cover their share of the debt, while those that stay pay surcharges on their premiums.

Jan Grude, the trust's chief executive officer, said the majority of agencies pay their share of the deficit every month, and that relatively few complain.

"We really are talking about a small number of agencies making a lot of noise [and] account for a very small proportion of our total beneficiaries," he said.

Egner said his alleged share of the trust's deficit increased by $100,000 in a single year.

"I want out," he said. "I can't afford to have this liability that's attached to me continue to grow, and I don't have any control over that. I could be in the game here for another year and it could be $450,000 instead of $350,000."

Community Living Victoria is in a similar predicament.

Its share of the deficit jumped $116,000 in one year and now sits at $405,000, said executive director Ellen Tarshis.

"The risk if we stay in is continuing to have what they claim is a rising liability. If we leave, we could face litigation."

Grude said that if agencies refuse to pay the exit levies, the trust will sue and likely win.

"The courts would say, 'You signed a contract. This is a legitimate obligation.' "

The agencies disagree and are considering banding together to fight back.

Egner said they hoped to avoid a court battle in which both sides would be spending government money on legal fees.

"I don't think we want to go there," he said, "but I don't know how else we can resolve it."